Magti Pushes us Back to 1990s

May 16, 20161,891 Views

Magti raises service tariffs after competitive environment narrows. Magticom has increased the standard tariffs in all cellular and landline networks to 0.24 GEL a minute.

The Banks&Finances wrote in April that Magticom company intended to increase service tariffs. The company notified its subscribers about the decision via SMS notification, but the company had not released an official statement. According to the SMS notification, starting April 27 service tariffs would mainly increase for Bani subscribers by 0.14 GEL and the price of a minute conversation would be 0.24 GEL instead of 0.10 GEL.

However, the reality turned out different, anyway. Increased tariffs touched both Bani and Magti subscribers. Starting April 27 Magticom subscribers pay 0.24 GEL for a minute conversation with Bani, Magti and Bali subscribers, as well as with clients of any other cellular and landline networks in Georgia.

Apparently, having signed an official agreement with Caucasus Online internet provider , Magticom obtained a monopolistic state on the telecommunication market and decided to put an end to the area of low tariffs on the cellular communications market and reincarnate the 1990s tariffs.

Magticom was a market monopolist in 1990s too and the company maintains is trying to restore its hegemony even today. In that period, the tariffs used to range from 0.24 to 0.28 GEL for a minute conversation. And today we are facing the same tariffs. The narrowed competition on the market has enabled the company to increase the tariffs.

It should be noted that, besides increased prices for a minute conversation, several monthly tariffs have also increased. For example, the tariff of Zero, currently its prices makes up 1 GEL a month, the starting call price makes up 0.07 GEL and the next 30 minutes were free of charge. The price has increased since April 27. Now the starting call price is 0.10 GEL and additional 0.10 GEL is charged on subscribers for every 10 minutes. This signifies previously the price of 30-minute conversation was 0.07 GEL, while the price rose to 0.30 GEL after April 27.

Naturally, in April, when prices increased, we inquired reasons and Magticom company noted that prices were rising because of the market realities. Apparently, they meant the narrowed competition on the market.

Having bought Caucasus Online, Magticom may become a market monopolist company and other cellular communication companies and internet providers will not be able to compete with it. All these developments are expected to further grow tariffs and considerably damage the consumer interests.

As reported, the 0.24 GEL tariff used to run in 1990s for both internal and external calls, when Magticom was controlling the whole market.

After Beeline and Geocell appeared on the market and the competition environment enlivened, the tariffs were decreasing on yearly basis. And now we are returning to the past and expensive service tariffs.

The position of the national communications commission aggravates the situation because it always backs the company interets to the detriment of the consumer Even in this case, the commission has not requested any explanations from Magticom after increased tariffs and the commission is less expected to make such a request in the future.

Hence, Magticom subscribers have to endure this aggravated situation. The past expensive tariffs have returned to the cellular communications market. And we have just to wait whether Magticom will further increase service tariffs after purchase of Caucasus Online.